Dennis' Mortgage Blog

Due to operator error and forgetfulness this was not posted last Friday.

Question of the week:  Why do I need to get my application in this week?

Answer:  Unless two lawsuits requesting a restraining order, or stay, are successful, or unless the Federal Reserve unilaterally decides to delay implementation of new Regulation Z, Truth In Lending (TILA) regulations regarding mortgage originator compensation the mortgage industry changes dramatically at 12:01 AM Friday April 1, 2011. 

After an extensive study in which only thirty-seven individuals were interviewed from three cities (Washington D.C., Kansas City and Los Angeles) with the interview questions changed from interview to interview, the Fed determined that consumers would benefit if it enacted regulations that mandated how mortgage originators can be compensated for their work.  The new TILA regulations are very complex and very vague leaving the industry with no guidance as to interpretation, but a heavy hand for violations. 

 Because of this effective with mortgages originated after March 31^st, or in many cases earlier since most lenders are requiring mortgages to be registered before March 31^st, closing cost estimates, rate quotes and terms of your mortgage will change.  We are still grappling with exactly how to implement many of the requirements one week before the regulations go into effect, and we are not alone.  In fact most of the industry is in the same position, unsure, uncertainty and very trepid about ensuring compliance is in order on new applications. 

Compliance not just on the new Fed regulations but also within the HUD rules for Good Faith Estimate disclosures enacted early in 2010, which could put some applicants files at risk for being in compliance with HUD but out of compliance with the Fed or vice versa. 

Basically it is a mess and we expect it to get messier in July when several policies come on line from the Dodd-Frank Financial Reform Act.  Dodd-Frank has not only created several new agencies, but has had existing agencies and departments, like HUD and the Fed, scrambling to impose their own regulations so as not to lose any power or oversight on not only the mortgage industry but any area of the financial sector.

My advice? If you are contemplating a refinance or purchase transaction get your application in and registered before Thursday to ensure you can get your application registered before the new TILA regulations take effect which will immediately change interest rates and costs…and most likely not to the consumers benefit.

Have a question for me?  Ask me!

Not a good week for rates.  After breaking through some strong resistance last week and spending most of the week looking like rates could be entering a period of drifting down, investors shrugged off news that typically would push rates lower.  Stocks continued their rise, up 5% from St. Patrick’s Day and 3% from Monday open to Thursday close.  As a result bonds, and mortgages were the losers.

For Friday economic news some this and some that.  Gross Domestic Product, GDP, was revised slightly higher for the 4^th Quarter of 2010, mainly some technical adjustments that had no impact on the markets.  Of greater importance looking forward was the University of Michigan consumer sentiment survey, a look at how folks feel about their financial condition today and looking forward.  The index dropped sharply from February to March, mostly due to rising fuel and foods costs.  The drop was among the top ten one month drops in the survey since it began almost forty years ago. 

Due to the sentiment reading mortgage rates are holding their own despite another up day for the Dow, the fourth in a row thus far. 

A new feature! I am working on posting snippets on the economy and mortgage industry on a daily basis on My Blog.  Cross posting on Twitter (follow me at dcslb) and I’m working on getting a Facebook page together for mortgage information and updates.  In the meantime check in whenever for daily updates or to review the week.

This week’s blog postings:

Housing and Treasury dump: On Monday news came out on existing home sales and median prices plus new from the Treasury Department on what it intends to do with the $160 billion in mortgages it owns.

War, radiation, slow housing positive for stocks and negative for interest rates?: A look at the counter-intuitive markets and investing that is happening on Wall Street.

Is $32,000 enough incentive to buy a new home?: Wednesday’s look at the release of new home sales and prices.

Who’s blowing up the balloon?: Thursday’s look at the run up in the stock market.  Why?

Feedback is always welcome!  Please let me know if what you think of a bit more information through the week on specific economic events and issues relating to the mortgage and housing markets versus more detail on the Friday update.  Instant feedback click here

Rates for Friday March 25, 2011 Rates lost last week’s gains with investor pouring money into the stock markets.  Not a time to challenge the market and risk your rate, if you can lock.

FIXED RATE MORTGAGES AT COST OF 1 POINT*

30 year conforming                               4.75%               Up 0.125%

30 year high-balance conforming           4.875%             Up 0.085%

30 year FHA                                         4.375%             Up 0.125%

30 year FHA jumbo                              4.75%               Down 0.25%

Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. 

*Please note that rates quoted are based on average of several lenders for a purchase transaction with 20% down payment with an impound account for taxes and insurance and a minimum FICO score of 740; APR is not quoted as it is dependent upon specific loan amounts, lenders and services selected.  Numbers provided are for comparative purposes only.

Spring showers have flowers bursting across Southern California, and a great opportunity for home buyers.  Now is a great time to look at homes to buy as the rains allow you to see any problems that exist for roofs, foundations, leaks, etc. 

Have a great week,

Dennis